Moral dilemna in a global context

Devil on their shoulder: issue of Vodafone & modern telecom companies, balancing human rights with government demands

As globalization continues to spread in its various forms and processes, one of the most visible aspects of this phenomenon that has emerged over the last few decades is that of globalization of communication. This phrase stems from the logic that “social space comes to acquire new qualities with telematics, albeit only in the networked parts of the world.”  (Chase-Dunn, Kawano, & Nikitin, 1998). This means that in countries where the people are linked by communication technology they are able to socialize and share information in an entirely new area of cyberspace. They can now bend the boundaries that previously confined their relationships and access a cheaper, easier network in which to connect across time and space. This trend has been developing for a while now, yet in modern day it is associated with great risk as well as reward. Because such new web and cellular technology allows users “to move things visible and invisible from one part of the globe to another "with virtually no restriction, it “may have qualitatively altered the relationship between states and consciousness.” (Chase-Dunn, Kawano, & Nikitin, 1998) Where the state once held ultimate authority over the flow of information through a country via television, radio, or print news they now are reduced to symbolic watchdogs without much bite to match their bark. In the face of online media such as Facebook or Twitter and the instantaneous speed of text messaging, it is the people themselves who hold the most influence in publishing and spreading information to all corners of the globe.  This begs the necessary question; “how, and to what extent, will this undermine the power of states to structure social relationships?” (Chase-Dunn, Kawano, & Nikitin, 1998)

            In the past month, the answer to this question has become alarmingly obvious in Egypt where massive demonstrations against government corruption and abuse began on January 25 to call for the resignation of President Hosni Mubarak. Cellphones and email were used to spur the Egyptian people to action and plan times for publicly visible acts. After the death of Khaled Saeed, a young Egyptian man who was supposedly beaten to death by the police, hundreds of thousands of citizens rallied together in a Facebook group entitled “We are all Khaled Saeed,” which called for action in the face of such an injustice. It was later revealed that Google employee Wael Ghonim was behind the creation of the group. This proves the power of new communication technology and its ability to move information right under the watchful eyes of the state. Regardless of the restrictions placed on the population, these technologies “provide new opportunities for the less powerful to organize themselves to respond should global capitalism run them over or leave them out.” (Chase-Dunn, Kawano, & Nikitin, 1998) Another powerful use of this technology was the video posted by female activist Asmaa Mahfouz where she publicly challenged people to step up and do something about the situation in Egypt. This use of social media and cellphone networks allowed the people to coordinate themselves and connect instantly in a country which would be otherwise relatively isolated. Powerful photos were also taken on cellphones in the middle of violent street fights which spread like wildfire through the country and across the world. Although Mubarak did eventually step down, almost 400 people had to die in this struggle for freedom.

            As Egypt’s largest mobile operator, Vodafone was at the center of the media and political hailstorm that took over the country. Launched in 1998, it provided voice, data and broadband internet services to the Middle Eastern population. Activists had been using the network heavily over the course of the protests to arrange meeting places for demonstrations, send inspirational messages to fellow freedom fighters, and capture photographs of the terrible situation within Egypt’s borders. However, amid the government’s inability to effectively censor these messages, they took a massive step in ordering Vodafone to shut down their network on January 27.

Vodafone Shuts Down Mobile Service in Egypt - Fox News

Within minutes cellphones went dead, the internet was disconnected, and millions of Egyptians were plunged into a total communications blackout. Vodafone, whose majority shareholders are Vodafone Group with 54.93% and Telecom Egypt with 44.95%, received orders from the government and despite their promise of” complete transparency towards [their] valued customers, [their] reputable employees, [their] esteemed shareholders and towards the Egyptian community at large,” they were forced to halt business operations. (Wireless Federation, 2011) As explained by Vodafone Group CEO Vittorio Colao “‘Egyptian authorities’ had asked the company to ‘turn down the network totally’” which was a legitimate request under Egyptian law, and therefore the company complied with the demands. (Murray, 2011) They claimed that the government could have forced the network to close anyways, so by voluntarily agreeing they hoped to reduce any chance of harm to their employees and customers as well as have the opportunity to quickly resume the connection. Although voice services were restored to the majority of the network within days, this was still a brash move by the government to silence protesters that only left them fuming in even more anger towards both the state and Vodafone, a company they had previously trusted to meet their communication needs.

Merely a few days later, Vodafone was again stuck between the government and the people when they were “forced” by the Egyptian government to send pro-Mubarak messages through their cellular network.

 Social Media Used for Government Propaganda - Fox News

 In early February, many of their cellular customers were outraged after receiving text messages that announced ““The Armed Forces urge Egypt’s loyal men to confront the traitors and the criminals and to protect our families, our honor and our precious Egypt!” (Salam, 2011) Vodafone made a public statement saying they were forced to send these messages and that the current situation was “unacceptable” because the company wants to make it clear that “all messages should be transparent and clearly attributable to the originator.” (Salam, 2011) Despite their attempted protests against network hijacking, the company continues to shy away from the blame by continuously asserting that the government has the final word on telecommunications networks. As a small compromise Vodafone has begun to offer cellphone credit refunds until the whole mess has been straightened out. Yet will this be enough to pacify the Egyptian people when their right to communicate and express their opinions through communication networks has been wrenched away?

I. When an Egyptian issue becomes a global moral dilemna...

Mubarak and Vodafone CEO

Protests in Egypt

On the left corner: Mubarak, on the phone with Vopafone CEO

 On right corner: Vodafone CEO, worried about the situation

Mubarak at his desk, ready to "kill" Vofafone's network

Vodafone's CEO, woth shareholders or with government

II. Leadership and ethics in a mad mad world

There are any number of methods to managing within a corporation, but in regards to corporate social responsibility there are two very general views. They are: either you believe in it or you don't. In some ways the jury is still out on whether it is affective or not. Most of that has to do with the definition of how affective in terms of business 'profit'. That is to say, that some managers engage and encourage being socially responsible, while others try to avoid it altogether because they don't believe it will be either profitable or beneficial to the companies bottom line.

Foreign Investment Advisory Service (FIAS):

"Corporate social responsibility is the commitment of businesses to contribute to sustainable economic development by working with employees, their families, the local community and society at large to improve their lives in ways that are good for business and for development"

      Vodafone Egypt - Corporate Social Responsibility (CSR)

• Vodafone Egypt is proud to be considered as leaders in CSR in Egypt. It aims to connect and develop the community and accelerate the advancement of Egypt.
• Vodafone Egypt is one of the first corporate companies in Egypt to establish a department dedicated to Corporate Social Responsibility activities.
• This reflects the commitment to Corporate Responsibility at the most senior level, and how it is embedded into our business here.
• The department was established in 2004 and has since then been engaged in philanthropic and community support projects.
• Vodafone Egypt’s Corporate Responsibility program covers a wide range of activities:

- Environmental issues (recycling, waste management, and network deployment)

- Education development

- Community support programs

- Health support programs

- Employment engagement programs to encourage a community spirit among our people

 

 

 

III. Doing business with “bad regimes” in a global economy

The Vodafone case is a very current example of violation of article 19 of the universal declaration of human rights. Egyptians protested to have the right to express their opinion, and to refuse unvalued information. Vodafone unethically helped the government to take that right away from its people. This is not only stopping people from contacting each another, and interrupting their personal life, it is also keeping people away from knowing what’s really going on in the country. It created a feeling of fear and unfairness.  Egyptians should not be receiving pro-mubarak text messages without their own willingness, and to get their phone services turned off.

“Should a company invest in a foreign country where civil and political rights are violated?” (Thomas Donaldson 2009) Vodafone’s case in Egypt raises an important question in the global business environment: Can companies have activity and establish business in countries considered as “bad regimes” (unstable governments, dictatorships, corrupted or repressive regimes, countries suffering civil unrests…)? If so, should these companies follow the local laws in all cases, even if these laws are not democratic or do not respect human universal rights? How can the companies dealing with unstable countries, and above all communication companies, make decisions facing the government demands and regulations? “Even the best-informed, best-intentioned executives must rethink their assumptions about business practice in foreign settings. […] There are fundamental values that cross cultures, and companies must uphold them.” (Thomas Donaldson 2009)

1. Complying to the local law vs universal human right

Compliance with laws and regulations is important, and in most of the cases, should not be discussed by companies. However, Vodafone case is showing that doing so, companies can sometimes assist a regime in establishing control. When local laws are applied against human fundamental rights, companies should think about it before simply applying the law. From an international point of view, and even for the local population, always complying can sometimes be seen as complicity with the government. Even the History has shown us that following the laws or following orders could lead to very bad decisions. “The core values establish a moral compass for business practice. They can help companies identify practices that are acceptable and those that are intolerable – even if the practices are compatible with a host country’s norms and laws” (Thomas Donaldson 2009)

Mr. Salil Tripathi, director of policy at the Institute for Human Rights and Business gave his opinion about the steps a company should take before complying with domestic laws:

• Ask the state to provide instructions in writing.

• Ask the state to explain the rationale.

• Argue its own case - and responsibility to customers - to provide uninterrupted services.

• Provide the legal basis and rationale to consumers and investors for suspending services.

• Provide sufficient warning to customers.

• Consider withdrawing operations, if forced to act in ways that undermine its responsibility to respect human rights.

This kind of issue is most of the time observed concerning telecoms companies and ISPs. This sector has much more responsibility when they are doing business in places like Egypt, or Iran, Sudan or even China, where the governments tend to control the communication systems.  Telecoms in authoritarian regimes should comply with the international law first in order to no go against human rights. They should consider this problematic before signing contracts with these governments or engaging into any kind of arrangement with them.

However, the balance between due diligence and business interest might be difficult to find. We should also take into account that mobile telephony and information technology have played a large role in opening closed economies, mainly under authoritarian regimes. Would Egyptians be better off if Vodafone had decided to stop to do business in Egypt?

These different arguments are showing how complex the question is in the global context.  In order to understand better, it seems important to analyze how companies have reacted so far, and how they can be helped by international organizations.

2. Communication companies in the heart of tensions

When global telecoms companies choose to cooperate…

Different cases show that sometimes telephony operators or internet providers choose to keep business in countries with very unstable governments, and follow local rules. These examples show how complex it is for the multinationals to deal with authoritarian regimes:

• Ericsson in Sudan: Ericsson believes that developing mobile business in Sudan can help the country’s economic development
  
  
• Nokia in Iran: In July 2009, Iranian protesters decided to boycott Nokia for providing the Iranian government with the capability to tap mobile telephones, scramble the SMS text messages used by many protesters to communicate, and interrupt calls. Nokia actually provided the Iranian government with a monitoring center, as part of a deal under which Nokia Siemens Networks provided Iran with mobile-phone networking technology. The technology provided by Nokia may have given the government the ability to listen in on individual phone conversations, and to track down opposition members and critics. Nokia Siemens Networks spokesman Roome said the company carefully considers where it does business:  “For example we don't sell telecommunication networks to countries like North Korea or to Burma, and also we know very little and saw very little information coming out of those countries." Ironically, many of the videos coming out of Iran -- some showing protests and citizens on rooftops chanting "Allah Akbar" and "Death to the dictator" under the protection of night -- are likely being filmed on Nokia cell phones.  One activist in Iran said  people should keep using their mobile phones to send out information about the events inside the country, while at the same time pressuring Nokia to cancel its contract with Iran.  So, is Nokia business in Iran helping the spread of freedom of speech and opinion, or endangering it?

• Motorola in China: After Google case in China, Motorola decided rely less on Google's services in China for some time. Motorola signed a partnership with Google's rival in China , Baidu, in order to be able to launch its new Android smartphones of the market without too much delay (already postpones after Google announcement).

Sometimes, but not often, companies can also choose to raise their voice against corruption, censorship and national regulations. The best case is for sure Google in China. In China, “the industrial-development policies often conflict with the state’s desire to maintain control over political expression and media content” (Arabic Knowledge@Wharton, 2010). At one point, Google decided to stop censoring its search engine. “What Google achieved by taking a stand against censorship in China was securing political points in the U.S. and Europe. They are seen as taking a stand for the first amendment and fighting for free speech and this helps Google a great deal.” (Arabic Knowledge@Wharton, 2010).  Google has shown an example of resistance to authoritarian regimes, in the name of freedom of expression. One could think that undemocratic behavior or actions going against basic human rights principles would be now denounced by companies and would restraints investments in the countries concerned. “Inside China, corruption endangers foreign direct investment because illicit behavior by local officials could expose Western firms to potentially vast environmental, human rights and financial liabilities.” (Minxin Pei 2007). Unfortunately, Vodafone’s case shows that companies still face problems in balancing the pros and the cons between respecting local laws in countries where they have business and contracts with governments, and respecting fundamental right of “freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers” (Universal Declaration of Human Rights, Article 19).

3. Companies have assistance: the Global Network Initiative (GNI)

All over the world, the ICT sector faces pressures to comply with local laws and policy that are in conflict with international human rights standards. In response, in 2009, after 2 years of negotiation, The Global Network Initiative was founded as a non-governmental organization (sponsored by multinationals such as Yahoo, Google and Microsoft, NGOs and universities). Its goal is to protect and advance freedom of expression and privacy in Information and Communications Technologies (ICT). It prevents Internet censorship by authoritarian governments. His main role is to implement GNI principles and to highlight trends and issues of concern for all stakeholders in the information and communications technology (ICT) sector. For instance, here are the issues the GNI published some statements and resources:

• 
  Google’s new approach in China
• Global Internet Freedom
• Increased censorship online

This organization might be a first step to help companies discuss and think about the real legitimacy of making business with authoritarian business, particularly in the ICT sector. It may make some companies more confident in their choice of preferring human rights respect. 


IV. Conclusion: Vodafone example: a not-to-do example for the future?

Vodafone’s case make us think about the relation between moral and legal. Is legal always moral? Should company consider legal actions first or moral ones? In the case of communication technology, their implementation in all countries can be liberating, as most technologies. However, their use can have some negative impacts for human rights. They can be used for good purposes, or can be evil.

Mobile phones help farmers to check their prices in distant markers and connect to people. They also allow young demonstrators caught up by the police to reassure their parents they are safe. They allow people to take photos, videos of how law enforcement official behave.

Telecom companies should not boycott business in countries with authoritarian regimes. However, they should always consider the people’s interests before the government’s ones. IN order to make the right decisions, they can find support locally from human rights organizations, but also from international ones like the GNI. 

References:
Chase-Dunn, C., Kawano, Y., & Nikitin, D. (1998).Globalization: A World-Systems Perspective. John Hopkins University Department of Sociology

Murray, A. (2011, January 28). Vodafone CEO Explains Egypt Phone Cutoff. Retrieved March 3, 2011, from The Wall Street Journal Blogs: http://blogs.wsj.com/dispatch/2011/01/28/vodafone-ceo-explains-egypt-phone-cutoff/

Salam, M. A. (2011, February 5). Vodafone Says Forced to Send Pro-Mubarak Messages. Retrieved March 3, 2011, from Bikyamasr: http://bikyamasr.com/wordpress/?p=25694

Wireless Federation. (2011, February 7). Vodafone Egypt Denies Mubarak's Stake in Company. Retrieved March 3, 2011, from Wireless Federation: http://wirelessfederation.com/news/35134-vodafone-egypt-denies-mubaraks-stake-in-company/

Donaldson, T. (2009), Values in Tension: Ethics away from Home, Harvard Business Review

Google's License Renewal in China: Victory, Defeat or Stalemate? (2010), Arabic Knowledge@Wharton, Retrieved from the World Wide Web: http://knowledge.wharton.upenn.edu/arabic/article.cfm?articleid=2505

Rethinking Corporate Social Responsibility (2005), National Consumers League Study

Cavett-Goodwin, D. (2007), Making the Case for Corporate Social Responsibility, Retrieved from the World Wide Web: http://culturalshifts.com

Pei, M. (2007), Corruption Threatens China’s Future, Carnegie Endowment for National Peace publication

Mokfi, M. (2010), Nokia Faces Wrath Of Iran's Protesters, Radio Free Europe Radio Liberty, Retrieved from the World Wide Web: http://www.rferl.org/content/Nokia_Faces_Wrath_Of_Irans_Protesters/1777717.html

Vodafone in Egypt: How tech companies can uphold, not violate, human rights (2011), The Christian Science Monitor, Retrieved form the World Wide Web: http://www.csmonitor.com/Commentary/Opinion/2011/0222/Vodafone-in-Egypt-How-tech-companies-can-uphold-not-violate-human-rights

Galdieri, L. V. (2011), Doing Business with Bad Regimes: Vodafone in Egypt ,  Open Salon, Retrieved from the World Wide Web: http://open.salon.com/blog/louis_v_galdieri/2011/02/01/doing_business_with_bad_regimes_vodafone_in_egypt

Tripathi, S. (2011), How should Internet and Phone Companies respond in Egypt?, Institute for Human Rights and Business, Retrieved from the World Wide Web: http://www.institutehrb.org/blogs/staff/internet_providers_in_egypt.html

Sherman, E. (2011), Vodafone: Egypt Made Us Send Those Pro-Mubarak Texts. Critics: So?,  Bnet, Retrieved from the World Wide Web: http://www.bnet.com/blog/technology-business/vodafone-egypt-made-us-send-those-pro-mubarak-texts-critics-so-updates/8335

De Kerros, T. (2011), Vodafone Egypt: A Tale of Profits over Ethics, The Entrepreneurialist, Retrieved from the World Wide Web: http://theentrepreneurialist.net/2011/01/29/vodafone-egypt-a-tale-of-profits-over-ethics/

Goodwin, D. C. (2007) Making the Case for Corporate Social Responsibility. Retrieved from the web in March 2011